Leases can save you a bundle on your monthly payment, but you should never forget that you don't actually own the vehicle; you're only the caretaker. And if – as the caretaker – you're less than considerate in the care and feeding of your leased vehicle, you may get a very expensive reminder at the end of your lease when your car undergoes its wear-and-tear inspection.
That's when you learn the cost for the door ding you got in the supermarket parking lot. Or that cigarette burn in the upholstery. Or those extra miles from your family vacation to California. Add it all up, and you may be on the hook for hundreds or even thousands of dollars. Some wear-and-tear is worth fixing in advance, while other problems might be safely ignored.
Here are some tips to help you – and your wallet or purse – survive the inspection.
1. Don't schedule the appointment at your dealership
It's important to understand that your dealership will probably not inspect your car when you return it. In most instances the leasing company will hire a contractor, who will travel to the store to inspect the car. So it won't matter if you have a long-standing relationship with your dealer. He can't alter the inspection report, even if he wants to.
So if your leasing company permits it, you should schedule your wear-and-tear inspection at your home or business. Inspectors are human. If you are present during the walkaround to plead your case, he may give you a break, says Doug Fox, owner of Ann Arbor Automotive, which has Nissan, Hyundai and Acura franchises in Ann Arbor, MI. "When the customer makes the mistake of dropping his car off at the dealership, that's when the inspector has a field day," Fox explains. "That's when you get terrible surprises in the damage report."
2. Repair damaged bumpers, broken windshields or bald tires
"Tires, glass and bumpers are the three things that you are always better off fixing yourself," says Fox. If your tires have at least one-eighth inch of tread remaining, you probably won't be charged. But if your tires are bald, you may be on the hook for replacements. This is why it's a good reason to rotate your tires on a regular basis. Find a repair shop near you.
Damaged bumpers are another common problem, and they can be costly. "If you dislodge it, that's a $1,000 replacement," Fox warns. Likewise, you'll be charged for any equipment that doesn't work properly, such as radios, window regulators, navigation systems and the like. It's a good idea to get these things fixed in advance, so that you can get a decent price on the repair. Don't forget to keep your receipts, so that you can document your repairs.
If a headlight or taillight is scuffed but not broken, you may avoid a penalty fee. But the inspector won't overlook a major crack in the windshield.
"You're always going to have grocery cart dents, scratches, things like that," says Ryan Lester, the Hyundai sales manager at Ann Arbor Automotive. "But they'll ding you for spider cracks in the windshields. I tell customers to pay the $100 deductible and get their windshield fixed. If you don't get it repaired, you're leaving your checkbook wide open."
3. Don't sweat minor door dings, scratches and upholstery stains
Check your lease policy. Every lease policy interprets these problems differently, so it pays to read the fine print. Small dings, scratches and stains are often considered to be legitimate wear-and-tear. In general, you're subject to what's known as the "credit card test" for lease damage. If the damage is a scratch that can be covered up by a standard credit card, you're good. Make sure you are covered by this credit card test before you turn your car in.
For example, some lease companies won't charge for body dents less than one inch in diameter, while others won't charge for dents less than four inches wide. But if there's a puncture in a body panel, in all likelihood you're going to be charged for it.
4. Keep all the equipment
If you left the cover for your car's luggage compartment in a corner of the garage, remember to put it back. And ditto for the spare tire cover or the third row of seats for your SUV.
5. Make sure that your car gets scheduled maintenance
Keep a written record of your car's maintenance, so that you can prove you changed the oil regularly, checked fluid levels, rotated the tires, etc. If you encounter engine trouble or other mechanical problems, your records will help demonstrate that you were not at fault. Of course, if your lease is no longer than 36 months, the vehicle warranty should cover the cost of any necessary repairs.
6. Think twice about wear-and-tear insurance
If you're a hopeless slob – or if you have small children who tend to spill things – you might consider buying wear-and-tear protection. Ally Financial offers wear-and-tear coverage for damage up to $5,000 on all Ally leased vehicles. Ford Credit has a similar insurance policy.
Your own lessor might offer such coverage, or your dealer might offer you a wear-and-tear policy from an independent insurer. Such policies generally cost the dealer about $500 or so, says Lester. But the dealer adds a markup when he sells the insurance to you. Be forewarned: Dealers can set their own prices for such insurance, and unwary customers may end up paying a hefty premium for their coverage. Do your homework.
7. Don't exceed your annual mileage limits, period
Lessors generally offer a range of mileage allowances. For example, Ford Credit offers seven mileage options ranging from 10,500 miles up to 19,500 miles per year on Ford vehicles. If you exceed your limit, you may be charged 15 to 25 cents per mile, depending on the lease. So if your excess mileage amounts to 10,000 miles, you could be billed $1,500. If you know you are going to do some serious driving, lessors generally allow you to buy extra miles for roughly a nickel per mile less than the penalty fee.